EUR/USD Forecast: Soaring Wall Street underpins the EUR
EUR/USD Current Price: 1.0719
- The US Gross Domestic Product was downwardly revised to -1.5% in Q1.
- US indexes extend their post-FOMC Minutes rally, moving away from bearish territory.
- EUR/USD is technically biased higher, although a bullish breakout is yet to be seen.
The EUR/USD pair was able to recover some ground on Thursday but ended the day trading a handful of pips above the 1.0700 and still below the weekly peak posted on Tuesday at 1.0748. The shared currency benefited from soaring equities, as Wall Street posted a major comeback following FOMC Meeting Minutes. The document released on Wednesday showed that policymakers are determined to keep hiking rates, but somehow, it was less hawkish than anticipated.
The dollar was further pressured by tepid local data. The country released the second estimate of its Q1 Gross Domestic Product, which growth was downwardly revised to -1.5%, worse than the previous estimate of -1.3% and missing the market's expectations of -1.4%. Additionally, Initial Jobless Claims for the week ended May 20 were down to 210K, beating the 215K expected. Also, April Pending Home Sales were down 3.9% MoM, while May Kansas Fed Manufacturing Activity contracted to 19 from 28.
On Friday, the focus will be on US Personal Consumption Expenditures. The core PCE Price Index is foreseen to rise 4.9% YoY in April, down from 5.2% in March, an encouraging sign toward taming inflation. The country will also release the final revision of the May Michigan Consumer Sentiment Index.
EUR/USD short-term technical outlook
From a technical perspective, there is room for additional gains. The daily chart shows that the 20 SMA turned marginally higher, now converging with the 23.6% retracement of the latest daily decline. The 38.2% retracement of the same slump provides immediate support at 1.0670. Meanwhile, technical indicators remain within positive levels, although without clear directional strength.
The near-term picture is neutral-to-bullish, according to the 4-hour chart. The Momentum indicator remains flat around its midline, while the RSI indicator grinds higher at around 62. Furthermore, the 20 SMA keeps advancing above the longer ones while providing intraday support. The bullish case will firm up if the pair manages to overcome the immediate Fibonacci resistance at 1.0770.
Support levels: 1.0670 1.0630 1.0590
Resistance levels: 1.0730 1.0770 1.0820
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Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
